Ecobank Uganda has lost a court battle to recover Shs 1 billion from Planbuild Technical Services, a construction firm, after the High Court ruled that the bank failed to prove how much the company owed it.
Dismissing the case, Justice Anna Mugenyi said the bank failed to authenticate the financial statements it produced, which were neither certified nor stamped.
According to the bank, Planbuild applied for six credit facilities between 2010 and 2013 and later defaulted on them.
The first was a Shs 200 million loan under an agreement dated November 8, 2010. The bank said it was to be repaid in three months at 4% interest and was backed by money from a contract to build a juice processing factory at Rino Camp in Arua District.
The second, another Shs 200 million, followed in April 2011, and in December 2011, the bank extended another Shs 190 million to the firm as bid security for building electricity networks in South Western Uganda.
In August 2012, the bank gave Planbuild another Shs 450 million loan at 29.5% interest per annum, to be repaid in four months.
The fifth loan facility, in March 2013, was letters of credit worth $168,709 for importing materials. The sixth, in December 2013, was a Shs 330m loan at 26% interest.
By July 2017, the bank said Planbuild owed it Shs 1.08 billion. It went to court seeking to recover the money and general damages.
However, Planbuild said it took the facilities to fund its working capital and made substantial repayments.
It argued that by the end of 2013, the bank had advanced Shs 1.05 billion while the company had repaid Shs 1.6 billion, extinguishing its loan liabilities.
Planbuild said Ecobank had collected Shs 602 million above what it lent, a gain of 57.3%.
The firm also said the bank ignored money from the sale of land at Plot 444 Najjera, which they said sold for Shs 200m in 2015.
It further argued that the default interest, which worked out at 39% a year, was excessive and amounted to an unlawful penalty.
Planbuild filed a countersuit saying Ecobank had wrongly charged it Shs 79 million and Shs 602 million in excessive penalty interest.
It also accused the bank of paying Shs 30 million from its account to a “fictitious person” without permission and of bouncing a cheque when the account had money.
Ecobank was first represented by KSMO Advocates, before S & L Advocates took over the case, while Planbuild was represented by AF Mpanga Advocates.
At trial, the bank called two witnesses, Alex Okello, its head of remedial management, and Monica Achiro Ochan, its head of credit.
The parties had agreed to appoint an auditor to work out what was borrowed, what was repaid and whether anyone had overpaid.
The auditor, CPA Kibeedi, told the court the bank gave him Excel extracts rather than authentic, system-generated records. He said they had inconsistent dates, entries and interest figures.
Because of this, the parties agreed the court would not rely on his report, and this left the bank to prove its own case.
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In her ruling, Justice Mugenyi said the bank bears the burden of proving the facilities advanced, the amounts disbursed, the terms upon which they were advanced, the repayments made and, ultimately, the amount outstanding.
She found the bank’s statements wanting.
She went through each loan facility and for several, including the first two, the statements did not even cover the period.
For others, she said, there was no entry showing the loan being paid out.
She noted that the law requires banks to keep records for at least 10 years.
“It is not sufficient for [the bank], which is the originator and custodian of the loan bank statements, to merely place before court a collection of papers with scattered narrations without corresponding sums and invite court to ascertain the indebtedness from them,” Justice Mugenyi said.
She concluded that the bank had failed to prove the alleged indebtedness by Planbuild to the required standard.
Justice Mugenyi therefore dismissed the case.
